Real estate giant Zillow has filed a lawsuit alleging some of Kentucky’s public record statutes are unconstitutional because they allow the government to charge more for records used for commercial purposes.
The machinery of Zillow’s enormous empire runs in part on public records. The Zillow site attracts about 131 million unique users each month on average by offering free access to data on 110 million U.S. homes, including its signature home valuations, called Zestimates. The site uses tax roll data obtained from public agencies to create Zestimates. Zillow does not charge for access to its website but, rather, makes money by selling advertising space to real estate agents and through products such as Zillow Offers and Zillow Home Loans.
Zillow Group has a market cap of $9.93 billion.
“Since Zillow launched in 2006, we have been working to set real estate information free to empower consumers and help them make smarter, more informed decisions on what is often the largest financial transaction of their lives. We are merely asking that basic information that is already in the public record be made available so Zillow can ensure that all Kentuckians have free and easy access to this important real estate data,” a Zillow spokesperson said in an emailed statement.
The lawsuit, filed in a U.S. District Court in Frankfort, Kentucky, alleges David Bork, the commissioner of the Kentucky Department of Revenue, and six county property valuation administrators (PVAs) the department supervises, have violated the First and Fourteenth Amendments of the U.S. Constitution, which guarantee freedom of speech and equal protection under the law, respectively.
“Zillow engages in the business of disseminating public government information in a truthful, non-misleading, and non-coercive manner, which is activity protected under the First and Fourteenth Amendments of the United States Constitution,” the July 9 complaint says.
The allegations concern statutes that allow county governments to charge different fees for public record data sought for a commercial versus a noncommercial purpose. Officials may only charge noncommercial requestors the actual cost of reproducing the public record data.
Those seeking the information for commercial or business purposes may be additionally assessed a “reasonable” fee for personnel time incurred in providing the data. They are also required to only use the data for the purpose stated in the request and are prohibited from reselling the data. News organizations and attorneys are exempt from these charges and requirements.
According to the complaint, Zillow requested tax roll data from six Kentucky counties — Shelby, Franklin, Henry, Owen, Trimble and Clark — in April and subsequently received price quotes between $9,924.40 and $39,079.95 from each county for the cost of providing the data for a commercial purpose.
In the complaint Zillow said it would be willing to pay for and comply with charges and requirements imposed on noncommercial requestors.
The extra charges and requirements for commercial requestors limit Zillow’s “right to lawfully disseminate the information” and “impose a burden on the protected speech of ‘commercial purpose’ requestors, such as Zillow, who seek access to public government information like the Tax Roll File based on the content of their speech, because the statutes have the practical effect of preventing requestors who seek to use government information, directly or indirectly, ‘for any use by which the user expects a profit either through commission, salary, or fee,'” the complaint said.
The statutes therefore “disfavor” the dissemination of government information by requestors who do so for profit, unless the requestor is doing so for an “approved government purpose” — even if, like Zillow, that requestor is not charging users for the information, according to the complaint.
“Requests made by those who seek to profit, directly or indirectly, from the use of the Tax Roll File, do not increase Defendant PVAs’ costs in acquiring or creating the data they collect pursuant to their statutory obligation to prepare the Tax Roll File,” the complaint said.
Moreover, Zillow’s attorneys noted that public agencies enforcing these statutes must show that they “directly advance a substantial governmental interest and that the measure is drawn to achieve that interest.” If the state’s interest is in raising revenue to cover its costs, a “less restrictive” way to do that would be to impose the same fees on all requestors for access to tax roll data, they wrote.
Zillow’s attorneys also said “controlling the dissemination of truthful public government information” is not a legitimate interest of the defendants and therefore they can’t justify requiring Zillow to waive its “First Amendment rights to re-sell or otherwise disseminate that information to third-parties.”
They said that although Zillow does not currently resell tax roll data and has no plans to do so, that the company may decide to do so in the future. The company said not being allowed to “disseminate that information … without restriction, will cause Zillow to suffer a serious, immediate, and irreparable injury.”
Inman has reached out to the Kentucky Department of Revenue and will update this story if and when we hear back.
This is not the first time Zillow has sued to avoid paying charges it views as excessive for public records. In December 2017, the company reached a settlement with Henry County, Illinois officials stipulating that Zillow receive tax roll data for free under the Freedom of Information Act (FOIA). The county had tried to charge Zillow $2,500 for the data.
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